- USD/JPY fluctuates in a tight range on Tuesday.
- Risk-on market mood makes it tough for USD and JPY find demand.
- First results from US election set to arrive in early Asian session.
After rising toward 105.00 on Monday, the USD/JPY pair dropped to a daily low of 104.46 on Tuesday but didn’t have a difficult time erasing its losses. As of writing, the pair was virtually unchanged on a daily basis at 104.68.
DXY continues to push lower
Risk flows are dominating the financial markets on Tuesday and limit both the safe-haven USD’s and the JPY’s gains, forcing USD/JPY to fluctuate in a tight range.
At the moment, major European equity indexes are up between 1.9% and 2.1% on the day, while the S&P 500 futures are gaining more than 1%. If the market mood remains upbeat in the second half of the day, USD/JPY could extend its sideways grind. However, market volatility is likely to pick up in the early trading hours of the Asian session with the arrival of the first results of the US presidential election.
Investors will keep a close eye on key states, Arizona, North Carolina, Florida and especially Pennsylvania. Depending on the US election’s impact on risk perception, the US Dollar Index (DXY) could go either way. A contested election could cause safe-haven flows to return to markets and provide a boost to the greenback. On the other hand, in the case of either a red or a blue wave could boost global equity indexes and weigh on the USD. At the moment, the DXY is down 0.55% on the day at 93.53.
2020 US Elections: Equities in three scenarios.
Technical levels to watch for
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